The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects. It is considered an independent central bank because its decisions do not have to be ratified by the President of the United States or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors[?] span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

The twelve regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized much like private corporations[?]--possibly leading to some confusion about "ownership." Indeed, many people incorrectly refer to the Federal Reserve as the "Federal Reserve Corporation." The Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold or traded or pledged as security for a loan; dividends are, by law, 6 percent per year.

The earnings of the Federal Reserve System come primarily from interest received on the Reserve Banks' holdings of U.S. government securities (which are used in the conduct of monetary policy) and from fees they charge depository institutions for providing services (such as processing and clearing checks). The expenses of the System are paid from these earnings. Any net earnings are paid yearly to the United States Treasury[?]. For 2001, the payment was $27.14 billion.

The organization committee was chartered with selecting the locations of between eight and twelve decentralized Federal Reserve Banks. They decided upon twelve cities, and a centralized "Board of Governors" in Washington, DC:

The Federal Reserve is comprised of a board of governors. The 7 members of the board are appointed by the President and confirmed by the Senate. The members are elected for a term of 14 years (with no re-appointment possible). The Federal Open Market Committee[?] (FOMC) comprises the 7 members of the board of governors and 5 representatives from the Federal Reserve Banks.

The Fed is in charge of setting the federal funds interest rate. This is the rate that banks are forced to charge each other for overnight loans to each other. This in term influences the Wall Street Journal prime rate[?] which is usually 3 percent higher then the federal funds rate. This prime rate is the relative rate that most banks price their loans at.

Since 2001, The Fed has lowered its interest rates several times to fight recession : lower rates make credit cheaper and so enable more investment, whereas saving brings less money (see monetary policy for more explanation).